Here's another fine example of media misfocus (in the aggregate; as we'll see, some of 'em got it right), in the coverage of Hostess shutting its doors. From the morning chat shows to the local "news" tonight, all the coverage I've seen has focused with a childlike obsessiveness on how not having Twinkies and Wonder "Bread" will leave a gaping hole in America's fat-encased heart. (In fact, the local news here actually went down to the nearest Hostess outlet and interviewed several customers -- not a one of 'em under three bills, and most looking like they might have a side job as Hoarders extras -- waddling around and grabbing whatever they could from the shelf. Because the impending scarcity of Ding Dongs is apparently a harbinger of Zombie Apocalypse or something.)
Sure enough, our vaunted entrepreneurial class have already taken it upon themselves to try to wrangle bizarrely, hysterically extortionate prices out of morons. Folks, I don't think I've had a Twinkie or Ding Dong since I was, like, 17 or so, and I'm not exactly a health-food fanatic. But I don't remember them being anything special, and if I'm paying ten grand for something, I better be able to either drive it, stick my cock in it, or go on a nice vacation.
Anyhoo, obviously what really truly sucks here is that 18,500 people are going to lose their jobs. And as the NY Times mentions, after the brief obligatory intro on the wonders of sponge cake filled with sugared lard, there were multiple factors in play here:
The plaintive paeans to lost childhood "icons" aren't annoying, just meaningless. It's a fuckin' snack cake ai'aight? People should be up in arms at the way the facacta health-care racket doesn't just screw them out of money and sanity, but jobs as well. They should be wondering why and how a company with $2.5bn in revenue still finds iself face-down and ass-up, while you know goddamned well that the private equity boyz that stuck them with all that debt made out just fine.
Just something to keep in mind next time this story crosses your radar -- are they talking about the jobs, and how they were lost in all this scavenging and negotiating, or are they fixating on Ding Dongs?
Sure enough, our vaunted entrepreneurial class have already taken it upon themselves to try to wrangle bizarrely, hysterically extortionate prices out of morons. Folks, I don't think I've had a Twinkie or Ding Dong since I was, like, 17 or so, and I'm not exactly a health-food fanatic. But I don't remember them being anything special, and if I'm paying ten grand for something, I better be able to either drive it, stick my cock in it, or go on a nice vacation.
Anyhoo, obviously what really truly sucks here is that 18,500 people are going to lose their jobs. And as the NY Times mentions, after the brief obligatory intro on the wonders of sponge cake filled with sugared lard, there were multiple factors in play here:
As the national appetite for junk food waned, the company fell on hard times, struggling against rising labor and commodity costs. In 2004, it filed for bankruptcy for the first time.Hunh. So private equity weasels and health-care costs (and yes, unions factor into this as well; while I'm pro-union, anyone should be able to see that negotiating with 12 unions is going to be an extremely cumbersome process at best, but more likely to be hopeless in most circumstances) are major factors here. Imagine that. Well, maybe we'll just have our Twinkies made in Mexico or Canada, like our American automobiles.
Five years later, the company emerged from Chapter 11 as Hostess Brands, so named after its most prominent division. With America’s new health-conscious attitude, it sought to reshape the business to changing times, introducing new products like 100-calorie Twinkie Bites.
But the new private equity backers loaded the company with debt, making it difficult to invest in new equipment. Earlier this year, Hostess had more than $860 million of debt.
The labor costs, too, proved insurmountable, a situation that has been complicated by years of deal-making. The bulk of the work force belongs to 12 unions, including the International Brotherhood of Teamsters and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union.
The combination of debt and labor costs has hurt profits. The company posted revenue of $2.5 billion in the fiscal year 2011, the last available data. But it reported a net loss of $341 million.
With profits eroding, the company filed for Chapter 11 in January. It originally hoped to reorganize its finances, seeking lower labor costs, including an immediate 8 percent pay cut.
....
While highly critical of management missteps, the Teamsters agreed in September to major concessions, including cuts in wages and company contributions to health care. As part of the deal, the union was to receive a 25 percent share of the company’s stock and a $100 million claim in bankruptcy.
The plaintive paeans to lost childhood "icons" aren't annoying, just meaningless. It's a fuckin' snack cake ai'aight? People should be up in arms at the way the facacta health-care racket doesn't just screw them out of money and sanity, but jobs as well. They should be wondering why and how a company with $2.5bn in revenue still finds iself face-down and ass-up, while you know goddamned well that the private equity boyz that stuck them with all that debt made out just fine.
Just something to keep in mind next time this story crosses your radar -- are they talking about the jobs, and how they were lost in all this scavenging and negotiating, or are they fixating on Ding Dongs?
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